BEIJING, CHINA - CHINA appears to have eased new rules allowing only state-owned entities to operate video-sharing services, saying existing private operators could remain in the fast-growing field after all.

State-owned companies would be the 'dominant' force in leading the development of audio-visual content on the Chinese Web, a government statement seen on Wednesday said.

But that won't rule out private firms that are in good standing with authorities.

The rules, which were first announced in early January and went into effect last week, were widely seen as an attempt by Communist Party authorities to transfer the government's television and radio censorship model to the exploding video-sharing segment of the Web.

The original announcement had said only 'solely state-owned enterprises or enterprises whose shares are controlled by the state' would be allowed to operate websites that post audio-visual material.

The move was aimed at eliminating all violent, sexual or gambling content, preventing the exposure of state secrets, and ensuring video-sharing sites 'abide by the moral code of socialism,' the government said in early January.

The rules triggered unusually harsh criticism by some of China's own state-controlled media, which said they would stifle development of the sector.

It remained unclear how successfully the government would be able to enforce the rules and how they would impact popular sites like YouTube and China's Tudou.

Under the rules, websites would have to seek a broadcast licence, renewable every three years.

Calls to the ministry on Wednesday went unanswered as China began its Lunar New Year holiday.

Analysts have said the rules appear to reflect growing government anxiety over the rapid growth and popularity of online video sites.

With other media tightly controlled, such sites often are the only outlet for such sensitive footage as anti-government protests, where they find a wide audience. -- AFP